Commercial Lease Economics

Commercial rent quotes hide the real cost. A 2,000 sq ft space at '$24/sq ft/year NNN' costs $48,000 base rent PLUS the tenant's pro-rata share of taxes, insurance, and CAM (common-area maintenance). A GROSS or full-service quote includes them; a MODIFIED gross splits selected items; an EXPENSE STOP caps the landlord's share at a base year, pushing increases to the tenant. Percentage rent adds overage above a natural or negotiated BREAKPOINT: at 5% percentage rent with a $40,000 base, the natural breakpoint is $40,000 ÷ 0.05 = $800,000 in sales. TI (tenant improvement) allowances and free-rent months are concessions that change effective rent.